Strange travel insurance pricing

JosephK

Looking at prices for renewal of annual travel insurance. As going abroad less (fed up of airport faff), decided to look at single trip cover from a leading travel insurer for same areas.

Was it cheaper, being for only a one-off trip? Not only was it more expensive, it was about four times the price  for same cover, approx. £2K as against £500. Is it just me or is that a bit odd?

DullGreyGuy

A bit but not massively, lets think through someone going on a trip to the US...

1) Single trip cover means you are absolutely going to travel and not only that but going to a high cost location. Many people buy Annual cover and inc a wide range of countries "just in case" and may never actually travel at all in the year and if they do it may only be to Jersey so no exposure on the medical expenses section still. Just think how many bank accounts that come with bundled travel insurance exist where the account holder never travels but the insurer is still being paid for the annual policy. 

2) Single trip cover is a one off sale, this is all the money they can say with certainty they are going to get from you and if you take another trip in the future they'll have to pay sales commissions again to those that introduce you etc. With annual it will be set to auto-renewal and so not only is there a much higher chance of future business but there is no/less commissions to be paid on that sale

3) I suspect, though dont have stats to back it up, that if someone is currently uninsured with a trip booked and just starts to think maybe their job isn't so secure or starts getting pain in their side and they're the only one in their generation still with a gall bladder, that they are more likely to go out and buy a single trip policy than an annual one and so you get a concentration of worse risk customers in the single trip



At the end of the day mass market consumer insurance is priced by a combination of statistical analysis and commercial decisions. Pricing analysts dont sit around considering what may be happening but can see their claims experience for each customer segment and product and price accordingly. Clearly for this insurer, in the round, they have to payout less on claims for Annual than Single trip 

JosephK

My insurance covers Europe plus Egypt/Morocco/Turkey etc. Just spoken to a friend of mine, he was quoted, for same areas, £1300 annual (he has a raft of medical conditions) and £900 single trip.

Some companies must have very different stats to others